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Does Venture Capital Spur Economic Growth? Evidence from Israel

Author

Listed:
  • Zhang, Biao

    (Economics and Management School of Wuhan University, Wuhan, CHINA.)

  • Zhang, Dongxiang

    () (Economics and Management School of Wuhan University, Wuhan, CHINA.)

  • Wang, Juan

    (Economics and Management School of Wuhan University, Wuhan, CHINA.)

  • Huang, Xiashuai

    (Economics and Management School of Wuhan University, Wuhan, CHINA.)

Abstract

Venture capital cannot only promote technological innovation and the development of high-tech industries, but also makes contribution to economic growth. Having a good reputation as the "Silicon Valley in Middle East", Israel is one of the most successful countries in developing venture capital. It is worth studying the impact of Israeli venture capital on its economic growth. We take Israel as example to establish an economic growth model with venture capital, which is taken as an endogenous variable in this paper. The results show that venture capital plays a significant role in the country’s economic growth.

Suggested Citation

  • Zhang, Biao & Zhang, Dongxiang & Wang, Juan & Huang, Xiashuai, 2013. "Does Venture Capital Spur Economic Growth? Evidence from Israel," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 115-128, June.
  • Handle: RePEc:rjr:romjef:v::y:2013:i:2:p:115-128
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    References listed on IDEAS

    as
    1. Christian Keuschnigg, 2004. "Venture Capital Backed Growth," Journal of Economic Growth, Springer, vol. 9(2), pages 239-261, June.
    2. Avnimelech, Gil & Teubal, Morris, 2006. "Creating venture capital industries that co-evolve with high tech: Insights from an extended industry life cycle perspective of the Israeli experience," Research Policy, Elsevier, vol. 35(10), pages 1477-1498, December.
    3. Timmons, Jeffry A. & Bygrave, William D., 1986. "Venture capital's role in financing innovation for economic growth," Journal of Business Venturing, Elsevier, vol. 1(2), pages 161-176.
    4. Jeng, Leslie A. & Wells, Philippe C., 2000. "The determinants of venture capital funding: evidence across countries," Journal of Corporate Finance, Elsevier, vol. 6(3), pages 241-289, September.
    5. Tsangyao Chang & Yuan-Hong Ho & Chiung-Ju Huang, 2005. "A Reexamination Of South Korea¡¯S Aggregate Import Demand Function: The Bounds Test Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 119-128, June.
    6. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    7. Thomas Hellmann & Manju Puri, 2002. "Venture Capital and the Professionalization of Start-Up Firms: Empirical Evidence," Journal of Finance, American Finance Association, vol. 57(1), pages 169-197, February.
    8. Samuel Kortum & Josh Lerner, 2000. "Assessing the Contribution of Venture Capital to Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 674-692, Winter.
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    Cited by:

    1. repec:wsi:ijitmx:v:14:y:2017:i:06:n:s0219877017500316 is not listed on IDEAS
    2. repec:rjr:romjef:v::y:2017:i:3:p:166-184 is not listed on IDEAS

    More about this item

    Keywords

    venture capital; economic growth; Cobb-Douglas function; Israel;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G2 - Financial Economics - - Financial Institutions and Services

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